How Much To Pay Your Advertising Agency?

September 6, 2007

Over the weekends, I received quite a few emails asking two questions: 1) What is the correct price to pay to the advertising agency/ freelance designer and 2) How to pay via “pay by performance”. Today, let’s deal with the first question as I’m sure you would ponder every now and then on how much to pay to your advertising agency/freelancer. Even if your guy comes up with a fantastic concept, you will still be wondering if you should accept that $3000 or $50,000 quotation.

What, exactly, are you paying for? Many think that they are only paying for that piece of advertisement or poster, the artwork. That would be very far from the truth. Behind that seemingly simple A4 artwork is a complex web of research, analysis, planning, conceptualizing, copy writing, experience, testing, creativity and execution.

“But there’s only a few lines plus one photo and my advertising agency took no more than a few hours!” Sure, it may look simple but, simple doesn’t equate to easy. Also please understand that many brains, several hands and umpteen years of experience made that quality and speed possible. One mentor told me: “A job that takes 20-minutes to accomplish doesn’t mean it is only worth 20-minute of time. Behind that 20-minutes lies 20 years of experience.”

It is not always easy to tell when slip-shod work is produced. Sometimes, a quick turnaround can produce a nice looking piece of work. A “nice looking”piece might be just that, eye candy. A detailed, professional critique could tear it to pieces. For example, is the headline relevant (catchy, maybe, but relevant?), is the product shown correctly (it might be upside down, I have seen it!), is there a call to action, is the company logo unduly big that it became an eye sore and so on.

A correct price is when you and your advertising agency agrees that it is a fair deal. So what should you pay for and what price is fair?

Ideally, paying by performance will be fair and it is usually a win-win situation for both parties. However, if a fee-based compensation is better suited and you are using your regular agencies, you can consider these factors against the quoted fees:

Target Accomplishment
Does the agency always meet or surpass the objective, goal and expectation?

Work Quality
Does the agency always have a refreshing idea even if based on the same old promotional mechanism you used for the past 3 years? Is there a finesse that made your brochures look a tad more premium than your fiercest competitor?

Delivery Punctuality
Does the advertising agency say Tuesday and you only get to see your ads on Friday?

Service Responsiveness
Does the advertising agency respond to all your queries immediately or do they take their time getting back to you? Is there a dedicated support staff or team other than your AE?

Calibre of staff
Does the advertising agency have experienced marketers to be your think tank? Do they have daredevils that forge ahead through the creative frontiers?

These should form the basis to determine a fair price. Do not look at the artwork only. That is just one piece of a much bigger picture. And please, do yourself a favour by not doing any of these:
– Get 3 quotes and award the job to the lowest bidder. (Seriously, do you buy ALL your dresses at the discount bin?)

– Get 3 quotes and ask the best qualified bidder to match the price of the lowest bidder. (Ever hear of “pay peanuts and get monkeys”?)

– Start bargaining AFTER the advertising agency has delivered the final piece of work

All in all, the idea is to be fair. The creative people have spent many years to earn their stripes. Just as you will not expect your top sales managers to draw the same salary as the junior secretaries, why then would you expect to pay your advertising agency less than the best?

8 Replies to “How Much To Pay Your Advertising Agency?”

i’ve had incredulous scenarios whereby the client wanted to pay $100 for their ad after viewing my portfolio and loving what they saw.

Another tried to slashed my fee down by 50% after the budget blew due to their indecision.

Another blew up on me after their printer screwed up on colour cos they weren’t wanting to pay a little bit more for my production experience and not understanding the production process which I have expertise in.

Now one tells me they have to reprint due to spelling errors ON THEIR SIDE like a hyphen on a word THEY CREATED and expects me to pay for it.

Creative people are really exploited. It’s unfortunate that none understands the amount of work for 3 lines (weight of line, colour of line, placement of lines and the concept behind the lines), a picture (digitally enhanced, airbrushed, cleaned up, cropped) and some words (what words, why, what font, what size where to place and how big). It’s really not that simple.

Yeah i say the gem lies in the simplicity of an ad/artwork. And to get to that takes alot. To trash out the fancy, to ignore beating around the bush, to attract the right people, to simply, make it work without too much fireworks. That is the price you’re paying for.

For the benefit of creative bargain hunters who ‘chiong’ for CREATIVE EXCELLENCE at the LOWEST RATES within the FASTEST TURNOVER, and seriously believe coming out with an effective design piece is as straightforward as a quick poo in the toilet or a few mouse clicks at the computer, consider this:

You PAY creative people, NOT JUST for the PRETTY GRAPHICS. Just as one would PAY a plastic surgeon to have he/her botox or nose done. you PAY creative people for their experience, their set of skills and expertise, creative vision and insights, to sell your product and service, to uplift your brand image. Ultimately, to arrive with the INNOVATIVE IDEAS that MAXIMIZE your marketing effort.

On a lighter note:
Creative people do not merely exist to compensate for anyone’s lack of artistic talent. Creative people need money for chiropractor and the best dark eye-circle remover in town after years of bending backward and making clients look good if not GREAT!

Yes, I totally agree with Vivienne. I was once a graphic designer myself. Once, someone showed me 2 rather similar artworks that cost $50 and $200 respectively. What’s the difference? To the client, paying $50 is great as he can get the same or equipvalent work of $200 job done. That’s where he is WRONG. Behind these 2 artworks, the $50 artwork need lots touch up, clean up and etc before it is ready to print. However, the $200 artwork need not. And who does this dirty work? Probably the printer who does not want to screw up on the job. Or if you got an inrresponsible printer, they will just get it print and point finger later at the designer. So the question is, do you want to play with fire and take such risk?

Remember the fable of “The Pied Piper”? The townsfolk (client) wanted something done. Got the Pied Piper to do work, but refused his due payment upon completion. As the tale tells it, he got his revenge.
In modern commerce, revenge comes in the form of compensation after due process (arbitration or legal duress). Seriously, who got time for this when it is a few hundred bucks? So, what can you do? Choose who you work with carefully, consider their ability and willingness to pay, to work out a favourable outcome to all, without anyone at an unfair advantage. Easy to say, tough to do.

Perhaps it is too sweeping for me to say this but the creative environment in Singapore does not support the creative business. I say this as a failed entrepreneur who has given up fighting against a value system that is blamed entirely on a government who has helped in no small measure, in crafting these values. It’s strange how at some point, it is more worthy to do creative work for a foreigner than your own people or your own kind. Creative ideas have been de-valued because they are not seen as asset-worthy investments but a cumbersome expense. I’ve once had a client bargain me out of S$20. Yet I don’t see how I could do the same at her restaurants (Chinese Feasts, Chongqing Hotpot etc) and at the same token, how she could do the same with her Issey Miyake dress (that quite frankly would outrage Mister Miyake if he ever saw it on her).
But what are we to do when it is the state that is nothing short of hypocritical by championing the cause of “the lowest quote” when it comes to treating their vendors and yet paying themselves a grotesquely high salary? Soon enough, this twisted mentality will filter down to the lowest ranks of society. That’s why we get shit service and shit-ugly visual communications all over the country. Quite frankly, let’s compare Singapore with other more sophisticated societies (see Tokyo, Sydney, New York, London etc) where strict pricing rates and creative professionals’ rights are protected. Singapore has proven itself to be a place that is very unsuited for the creative-minded, at least, those who intend to make a decent living. I’ve often joked about being a real prostitute than to end up as a “designer-whore” to unruly clients because there was a lot more dignity in the former. I’ve changed my mind now: only because I don’t think I am as attractive anymore.